See Gabe Newell's D.I.C.E. Keynote

Valve CEO Gabe Newell took the stage with director JJ Abrams yesterday, where they had a tongue-in-cheek debate on whether films or games were the best way to tell stories. Newell was back today, with a solo talk.

Gabe Newell's Keynote discussed structural changes going forward in the games industry. He announced up front it wouldn’t include any product announcements (sorry Half-Life fans), but instead wanted to focus on changing the way of how we think of a game. Newell addressed as more services emerge on the internet, the PC will have a natural progression into our living rooms and have to face the challenges of user integration.

He also discussed how games are evolving and the questions that must be asked about what makes a good game and how to invest development resources. He said while Valve was making the Half-Life series, a question they often asked was the way the game was responding to the player's actions or status. That’s why in Half-Life 2, the developers worked to make sure characters were looking properly at players in three dimensional space.

While a good time was spent focusing on the single player experience, Newell addressed how differently they had to approach multiplayer games and the value people get out of them. He discussed auction houses, marketplaces, the free-to-play model, and the explosion of user generated content. “Our customers have defeated us…not by a little, but a by a lot,” Newell says. “They’re building content that's just as good or better than what we're building…at a spectacular rate.” Maximizing user productivity was a big part of his talk as was discovering ways to reward the community with more engagement.

Take a look at his speech below.

For the uninitiated, D.I.C.E. Summit (design, innovate, communicate, entertain) is an annual event where game developers, scholars, and entertainers gather in Las Vegas to present new ideas to attendees. Think TED Talks with a focus on interactive entertainment, and you're on the right track. This year marks the 12th time the event has been held.